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Robin Cowan
''On the Number of Firms and the Quantity of Innovation''
( 2002, Vol. 12 No.6 )
This paper models a dynamic innovation process to examine the relationship between levels of R and D and market structure. In contrast to most of the literature, here R and D increases firms' knowledge stocks, making future R and D less costly. This s a feedback by which market structures can affect levels of R and D. In general while an increase in the number of firms reduces R and D per firm, industry R and D increases. The model also endogenizes the number of firms using a zero profit condition.
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
L2 - Firm Objectives, Organization, and Behavior: General
Manuscript Received : Mar 07 2002 Manuscript Accepted : Apr 19 2002

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